Minimum Wage and Cost of Living

[dergon darkhelm]

I don't tip because society says I have to. All right, if someone deserves a tip, if they really put forth an effort, I'll give them something, a little something extra. But this tipping automatically, it's for the birds. As far as I'm concerned, they're just doing their job.

I'm very sorry the government taxes their tips, that's fucked up. That ain't my fault. It would seem to me that waitresses are one of the many groups the government fucks in the ass on a regular basis. Look, if you ask me to sign something that says the government shouldn't do that, I'll sign it. Put it to a vote, I'll vote for it, but what I won't do is play ball. And as for this non-college bullshit I got two words for that -learn to f*cking type. 'Cause if you're expecting me to help out with the rent you're in for a big f*cking surprise.

[NESchampion]

The downside as often stated by those against raising the minimum wage is that it reduces available jobs (companies higher fewer people because each person costs more than before); additionally, minimum wage increases are typically met by increases in some cost of living items like bread, milk, gas, etc., so it really does nothing to help the bottom line.

I'm not sure as to the validity of said statements, just putting them out there as devil's advocate.

I'm sure we can all agree that relying on the government to get you out of poverty is a no-win situation; you'll have to pull yourself out with your own skills. The best the government can clearly do is provide a safety net, which is currently full of holes.

[mxlm]

Even the Economist doesn't take the 'if we raise minimum wage we'll reduce the number of jobs' argument seriously anymore.

[Rotku]

Really, mxlm? Do you have a link?

It's very basic supply and demand. You up the price, people demand less labour, so there becomes a surplus.

[Swift]

Australia is not very big on tipping either, especially not now that we have a 10% Goods and Services Tax built into just about everything we buy (with some exceptions, essential foods like bread and vegetables do not have it).

If i get service above and beyond what is expected i may tip, but minimum wage over here is much less painful than it is over in the US. By all means, your not on easy street, but you are also not desperately poor either.

[paazin]

Really, mxlm? Do you have a link?

It's very basic supply and demand. You up the price, people demand less labour, so there becomes a surplus.

Search the economist.com for articles concerning minimum wages and you'll likely find quite a few

[Rotku]

Here we go

Minimum wage

A minimum rate of pay that FIRMS are legally obliged to pay their workers. Most industrial countries have a minimum wage, although certain sorts of workers are often exempted, such as young people or part-timers. Most economists reckon that a minimum wage, if it is doing what it is meant to do, will lead to higher UNEMPLOYMENT than there would be without it. The main justification offered by politicians for having a minimum wage is that the wage that would be decided by buyers and sellers in a free market would be so low that it would be immoral for people to work for it. So the minimum wage should be above the market-clearing wage, in which case fewer workers would be demanded at that wage than would be hired at the market wage. How many fewer will depend on how far the minimum wage is above the market wage.

Some economists have challenged this simple SUPPLY and DEMAND model. Several empirical studies have suggested that a minimum wage moderately above the free-market wage would not harm employment much and could (in rare circumstances) potentially raise it. These studies are not widely accepted among economists. Whatever it does for those in work, a minimum wage cannot help the majority of the very poorest people in most countries, who typically have no job in which to earn a minimum wage.

[Drankathar]

When i was in america i found that the price of a meal out was far above what i usualy pay in australia, and the food was far worse. Thus being forced to add a tip ontop of the already high price just seemed pointless to me. I can understand that their working for nothing but *shrugs* over here we just dont tip. Your working your ment to be doing the best you can at the job anyway. If everyone that was ment to be getting paid minimum wage was gettting that then they wouldnt need people to tip.

Just find the whole idea that you HAVE to tip someone thats doing their JOB a joke.

[kmj2587]

Here we go

Minimum wage

A minimum rate of pay that FIRMS are legally obliged to pay their workers. Most industrial countries have a minimum wage, although certain sorts of workers are often exempted, such as young people or part-timers. Most economists reckon that a minimum wage, if it is doing what it is meant to do, will lead to higher UNEMPLOYMENT than there would be without it. The main justification offered by politicians for having a minimum wage is that the wage that would be decided by buyers and sellers in a free market would be so low that it would be immoral for people to work for it. So the minimum wage should be above the market-clearing wage, in which case fewer workers would be demanded at that wage than would be hired at the market wage. How many fewer will depend on how far the minimum wage is above the market wage.

Some economists have challenged this simple SUPPLY and DEMAND model. Several empirical studies have suggested that a minimum wage moderately above the free-market wage would not harm employment much and could (in rare circumstances) potentially raise it. These studies are not widely accepted among economists. Whatever it does for those in work, a minimum wage cannot help the majority of the very poorest people in most countries, who typically have no job in which to earn a minimum wage.

Rotku, picture the supply and demand graph. Alright, what you're saying holds true if the minimum wage is P >= equilibrium wage, which one cannot assume that it is. Keep in mind also that Supply and Demand is a model, and the empirical world deviates from the models constantly. Even the concept of equilibrium is a model and at best, a graph represents a point in time, and at any other point in time there will be a new equilibrium as supply and demand have shifted again. Looking at the entire US labor force and calling it one market is excess aggregation. For the vast majority of the US labor force, a rise in the minimum wage means absolutely nothing. For any firm who pays their base level employees $7.25 or more already, this doesn't change anything. For those who do, they will usually cut hours rather than people. So essentially your market that you're running supply and demand for consists only of those who are affected by this increase, approximately 5-10% of the labor force(not population). For the most part, the hardest hit demographic is teenagers who generally are not supporting themselves and work for spending money. Another minor effect is that those firms who subscribe to efficiency wage theory (paying above equilibrium wages to attract the best workers) will have to give their employees a raise as well or sacrifice some of their advantage. Overall the effect is likely to be so small as to not even show up in the headline unemployment figures.

When i was in america i found that the price of a meal out was far above what i usualy pay in australia, and the food was far worse.

Out of curiosity, where was this and which area of Australia is your basis for comparison? I should be able to find the cost of living difference for you, at least to the nearest major city. Nominally you average Australian has 81.2% of your average American's income, but only 76.4% of your average American's purchasing power, so it can be said that cost of living is measurably higher in Australia than the US at a national level. My guess is you were in a large city and may have gone to some restaurants that were relatively nicer than you thought they were.
(Just so no one thinks I'm pulling numbers randomly out of the air, those are from the the 2007 Edition of the Pocket World in Figures, published by The Economist)

[Grand Fromage]

Yeah well, when I was in Australia I found food was more expensive than usual and was much worse. :crossarms:

Except meat pies, those were pretty awesome and about the same price for a comparable meal here.

[Drankathar]

meat pies r awesome. Least we agree thar GF

[Mord]

Let's just agree that both the US and Australia are nations of undesirables.

[Joos]

It may be so, but they both have by far superior cuisine compared to the standard Norwegian food.

[Mord]

Take your Swedish meatballs and shove them up your a**!

[HEEGZ]

I've had a lot of friends and relatives who wait tables for a job. They all do it for the tips and usually average $8-20 an hour after their tips. None of them would work there if they didn't get tipped, but that is a part of our culture I guess. While rich bastards like Dergon don't generally tip (neener), those of us who make a lot less tend to tip 10-20% if service is good. If I am eating out, the tip on top of the tax and price of the food is part of what I'm planning to spend. If the food costs $18, tax is another $2, then it is a given that I will leave a $3 tip. If the bill comes to $40 (often) I usually just leave a five. I seldom leave more than 15%, and if the service is bad I don't leave a tip at all.

Back to the original comments about minimum wage... It is not enough to live on for a family. If you are single with no dependents you can make it with shared rent, but it is not a living wage per se. What really sucks is when minimum wage goes up, and those making only a bit more then it don't get a raise. Generally the wage paid by a job is held in higher regard the greater it is over the minimum. So a job paying $4 more an hour than minimum wage has less perceived value when the minimum goes up $2. This was a pretty big deal at my last job when suddenly you could find much easier jobs for not much less money. Most employers aren't going to want to raise the wages of all employees in step with the minimum wage. As has been my experience, the rich get richer and the poor stay poor. Though poor Americans are still pretty well off.